AUD/USD - Aussie Unchanged, NAB Business Confidence Next

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Includes: FXA, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The Australian dollar is unchanged on Monday, as the Aussie tries to recover from last week’s losses. AUD/USD is trading at 0.7560 in the European session. In economic news, Australian Home Loans rebounded with a gain of 1.5%, but this reading was short of expectations. Australian NAB Business Confidence will be released later in the day. Over in the US, there are no economic indicators on the schedule, but the markets will be paying attention to a number of events. US Treasury Secretary Jack Lew will speak at an event in Washington. FOMC member William Dudley will deliver remarks at an event in New York, and the Federal Reserve will release a statement concerning the discount rates to be charged to Federal Reserve Banks.

The Australian dollar has posted gains of 7 percent since the start of the year, to the consternation of the RBA. Governor Glenn Stevens decided to weigh in on global currency developments last week, saying that a higher Australian dollar could hamper the Australian economy’s recovery. Stevens hinted that the easing measures taken by other central banks had contributed to the Australian currency’s sharp appreciation. Will the central bank step in and lower rates in May? It’s certainly a possibility, and one key factor is the quarterly inflation report later in April – if inflation softened in the first quarter, the RBA could feel compelled to take action and lower interest rates.

On Thursday, with the markets still digesting the Fed’s dovish minutes, New York Federal Reserve president William Dudley stated that the Fed needed to approach future rate hikes with caution. Dudley reiterated Fed chair Yellen’s recent comments that although domestic growth was steady, the US economy remained prone to risks due to turbulent conditions in the global economy. Yellen’s dovish statements have dampened speculation about an April rate hike, which had been stoked by recent hawkish statements from several Fed officials. The Fed minutes showed strong differences of opinion among policymakers, with some members in favor of an April hike. As well, there was a split amongst members as to whether the recent pickup in inflation was sustainable. Many Fed members were worried about the lack of options available to the Fed since rates remain close to zero. This concern can have significant impact on the currency markets, since the dollar could strengthen if the Fed is unable to implement effective easing measures. What’s next from the Fed? A rate hike in April is highly unlikely, and a move in June will depend on economic data, in particular employment and inflation numbers.

AUD/USD Fundamentals

Sunday (April 10)

  • 21:30 Australian Home Loans. Estimate 2.1%. Actual 1.5%

Monday (April 11)

  • 8:30 US Treasury Secretary Jack Lew Speaks
  • 9:25 US FOMC Member William Dudley Speaks
  • Tentative – Federal Reserve Announcement
  • 21:30 Australian NAB Business Confidence

*All release times are DST

AUD/USD for Monday, April 11, 2016

AUD/USD April 11 at 7:20 DST

Open: 0.7563 Low: 0.7527 High: 0.7577 Close: 0.7567

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7385 0.7472 0.7560 0.7678 0.7796 0.7913
Click to enlarge
  • AUD/USD has shown some choppiness in the Asian and European sessions
  • 0.7678 is a strong resistance line
  • 0.7560 remains busy and was tested in support earlier. This line could break during the day
  • Current range: 0.7560 to 0.7678

Further levels in both directions:

  • Below: 0.7560, 0.7472, 0.7385 and 0.7213
  • Above: 0.7678, 0.7796 and 0.7913

OANDA’s Open Positions Ratio

The AUD/USD ratio remains almost unchanged on Monday, consistent with the lack of movement from AUD/USD. Short and long positions are close to evenly split, indicative of a lack of trader bias as to which direction the pair will take next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.